Amazon.Con

I have closely followed Amazon.com since the late 1990’s. Many of you can probably remember that Henry Blodget made his name as a stock analyst with his bold predictions about the upward direction of AMZN’s stock. Granted, this stock defies all laws of fundamental stock analysis and gravity. I’ve come to the conclusion that Jeff Bezos has got to be the greatest snake-oil salesman in history. He’s known for saying “entrepreneurs must be willing to be misunderstood for long periods of time.”

When the annals of history are written on AMZN, it will be known as “the company never made money but it’s stock remained insanely overvalued for long periods of time.”

I have written a very detailed analysis of AMZN’s financial statements. I show why AMZN’s business model generates impressive revenue growth but fails to produce any meaningful amount of cash flow or net income. I show how AMZN is really nothing but a Ponzi scheme dressed in drag.

Shorting any stock right now is a difficult proposition because the $4 trillion printed by the Fed is propping up the stock market. But once the stock market rolls over, stocks like AMZN that are insanely overvalued relative to their ability to generate profits are going to crash hard. In my report I have section that discusses using options to help you set up for the time when AMZN takes its next cliff-dive.

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4 thoughts on “Amazon.Con”

The expected collapse of this company has always been one of the reasons I’ve shied away from owning a kindle. Let’s say you have all your books in one and then the world wakes up and says, “Gee maybe a company that makes almost no money shouldn’t be selling for a price like this. Maybe its shares should be valued at penny stock levels.” All of a sudden there’s no service and your collection of books goes -poof-.

I don’t own Amazon stock and am not long call options on Amazon, so I have no horse in this race. Additionally, I don’t own a Kindle, though I know people that have them and they seem to enjoy them.

But if you think owning a Kindle will allow you to more easily read and and enjoy more books – my iPad makes reading much easier as my eyesight has gotten worse over the years – don’t deny yourself one simply out of fear of Amazon’s stock being overvalued and the company disappearing. For one thing, when you buy an electronic book, you download the file, and you own it. Amazon could cease to exist – the book will still be on your Kindle. And as overvalued as Amazon may be, we’re a long way – maybe many hundreds of books and thousands of hours of reading enjoyment – from you having to worry about the company disappearing. You may be doom-and-glooming yourself out of the enjoyment of something you’d really like using, over a scenario that’s far from certain and would not happen in this decade (global thermonuclear war not withstanding, but even then all the paper books on your shelf go poof too).

It’s one thing to be prepared for the future, but don’t stop living life out of fear of what’s coming.